Suppose That the Nominal Interest Rate Was 3 Percent and the Inflation

Multiple Choice

Suppose that the nominal interest rate was 3 percent and the inflation rate was 1 percent. What happened with the value of savings?

A) The dollar value of savings increased at 1 percent, and the value of savings measured in goods increased at 2 percent.
B) The dollar value of savings increased at 2 percent, and the value of savings measured in goods increased at 3 percent.
C) The dollar value of savings increased at 3 percent, and the value of savings measured in goods increased at 2 percent.
D) The dollar value of savings increased at 4 percent, and the value of savings measured in goods increased at 3 percent.